BILL NUMBER: AB 393	CHAPTERED  09/07/00

	CHAPTER   321
	FILED WITH SECRETARY OF STATE   SEPTEMBER 7, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 5, 2000
	PASSED THE ASSEMBLY   AUGUST 18, 2000
	PASSED THE SENATE   AUGUST 10, 2000
	AMENDED IN SENATE   JULY 5, 2000
	AMENDED IN SENATE   JUNE 22, 2000
	AMENDED IN SENATE   JUNE 12, 2000
	AMENDED IN SENATE   SEPTEMBER 8, 1999
	AMENDED IN SENATE   SEPTEMBER 7, 1999
	AMENDED IN SENATE   AUGUST 24, 1999
	AMENDED IN SENATE   AUGUST 16, 1999
	AMENDED IN SENATE   JULY 6, 1999
	AMENDED IN SENATE   JUNE 17, 1999
	AMENDED IN ASSEMBLY   MAY 28, 1999
	AMENDED IN ASSEMBLY   APRIL 27, 1999
	AMENDED IN ASSEMBLY   APRIL 6, 1999
	AMENDED IN ASSEMBLY   MARCH 23, 1999

INTRODUCED BY   Assembly Member Scott
   (Coauthor:  Senator Figueroa)

                        FEBRUARY 11, 1999

   An act to amend Sections 700, 1631, 1635, 1639, 1642, 1649.5,
1676, 1703, 1749, 1749.6, 1750, 1750.5, and 1751 of, and to add
Sections 1625.5, 1631.5, 1749.31, and 1751.8 to, and to add Article
16.7 (commencing with Section 1758.9) to Chapter 5 of Part 2 of
Division 1 of, the Insurance Code, relating to insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 393, Scott.  Insurance:  production agencies.
   (1) Existing law prohibits an insurer from transacting insurance
in the state unless the insurer has procured a certificate of
authority from the Insurance Commissioner.  Existing law requires an
insurer that has procured a certificate of authority to continue to
comply with the requirements as to its business set forth in the
Insurance Code and in other laws.
   This bill would clarify that continued compliance in this regard
includes, but is not limited to, compliance with existing law
governing the licensure and operation of production agencies, with
regard to employees or contractors who solicit, negotiate, or effect
insurance.
   (2) Existing law generally prohibits a person from acting as an
insurance agent, life agent, insurance broker, or insurance solicitor
unless that person holds a valid license issued by the Insurance
Commissioner authorizing the person to act in that capacity.
Existing law makes it a crime to act in a capacity for which a
license is required without a valid license.
   This bill would instead prohibit a person from acting in one of
those capacities, or from soliciting, negotiating, or effecting
contracts of insurance, unless the person holds a valid license
authorizing the person to act in that capacity.  It would provide
that the issuance of a certificate of authority to an insurer does
not exempt an insurer from compliance in this regard.  By expanding
the scope of activities for which a valid license is required, this
bill would expand the scope of an existing crime, thereby imposing a
state-mandated local program.
   (3) Existing law provides that, notwithstanding the prohibition
described in (2) above, no license is required for a person to act in
certain specified capacities or to engage in certain specified
activities, including (i) employment by an insurer at its home or
branch office which, among other things, does not include the
solicitation or negotiation of insurance, and (ii) employment as a
regularly salaried administrative or clerical employee of a licensed
fire and casualty broker-agent, where the employee devotes
substantially all of his or her services to activities other than the
solicitation of insurance from the insuring public.
   Existing law provides that these and the other enumerated
exceptions to licensure apply only if no commission is paid or
allowed, directly or indirectly, for acting in those capacities or
engaging in those activities.
   This bill would provide for an exception to licensure for
employment by an insurer at its home or branch office which, among
other things, does not additionally include the effecting of
insurance, for employment as a regularly salaried administrative or
clerical employee of a licensed fire and casualty broker-agent where
the employee's activities do not include the solicitation,
negotiation, or effecting of contracts of insurance from the insuring
public, and for employment by an insurer where the employee's duties
are inspection, processing, investigation, or settling of claims,
conducting safety inspections, or accepting or rejecting business
from licensed agents or brokers.  This bill would also provide for an
exception to licensure with respect to officers, directors, or
employees of an insurer or producer whose executive, administrative,
managerial, or clerical activities are only indirectly related to
solicitation, negotiation, or effecting the sale of insurance, as
specified.  This bill would also provide for an exception to
licensure with respect to certain other employees.
   This bill would provide that these and the other enumerated
exceptions to licensure apply only if no commission is paid or
allowed, directly or indirectly, by the insurer, creditor, retailer,
or other person for acting in those capacities or engaging in those
activities.
   (4) Existing law makes no specific provision for the licensure of
personal lines broker-agents.
   This bill would specifically establish a personal lines
broker-agent license for persons who sell automobile insurance,
residential property insurance, including earthquake and flood
insurance, personal watercraft insurance, and umbrella or excess
liability insurance, as specified.  It would enact related
provisions, including provisions regarding prelicensing and
continuing education qualifications and, licensure fees for personal
lines broker-agent licensees, and various other matters.  This bill
would require the Department of Insurance to investigate and
implement a system, and report to the Legislature in regard to the
system, permitting license fees to be paid electronically by
employers on behalf of their employees, as specified.  This bill
would also establish a credit insurance agent license for
organizations that sell specific types of insurance in connection
with, and incidental to, a loan or extension of credit other than a
loan in excess of $60,000 relating to or secured by real property
where the repayment period does not exceed 10 years.  The bill would
exempt from general provisions limiting increases in insurance
related fees, as specified, the licensure fees for credit insurance
agents for the years 2002, 2003, and 2004.  The bill would require
the sale of credit insurance to be accompanied by specified
disclosures to the consumer.  This bill would require the Insurance
Commissioner to report to the legislature by June 30, 2004, regarding
the effectiveness of the bill's provisions regulating credit
insurance agents in protecting consumers involved in credit insurance
transactions.
   (5) This bill would become operative on January 1, 2002, and would
require the Insurance Commissioner to adopt as emergency regulations
rules to implement the bill's provisions.
   (6) This bill would provide that the first-year startup costs
incurred by state agencies that are associated with the
implementation of this bill shall be reimbursed from the fee revenues
authorized by this bill that are received in subsequent years.
   (7) By adding new production agency licensure categories, this
bill would expand the scope of activities for which a valid license
is required, thereby expanding the scope of an existing crime and
imposing a state-mandated local program.
  (8) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 700 of the Insurance Code is amended to read:
   700.  (a) A person shall not transact any class of insurance
business in this state without first being admitted for that class.
Admission is secured by procuring a certificate of authority from the
commissioner.  The certificate shall not be granted until the
applicant conforms to the requirements of this code and of the laws
of this state prerequisite to its issue.
   (b) The unlawful transaction of insurance business in this state
in willful violation of the requirement for a certificate of
authority is a public offense punishable by imprisonment in the state
prison, or in a county jail not exceeding one year, or by fine not
exceeding one hundred thousand dollars ($100,000), or by both that
fine and imprisonment, and shall be enjoined by a court of competent
jurisdiction on petition of the commissioner.
   (c) After the issuance of a certificate of authority, the holder
shall continue to comply with the requirements as to its business set
forth in this code and in the other laws of this state, including,
but not limited to, Chapter 5 (commencing with Section 1631), with
regard to employees or contractors who solicit, negotiate, or effect
insurance.
   (d) Where a hearing is held under this section the proceedings
shall be conducted in accordance with Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code, and the commissioner shall have all the powers granted therein.

   (e) The commissioner shall either issue or deny an application for
a certificate of authority within 180 calendar days after the date
of the application.
   (f) The commissioner and his or her authorized representative
shall be prohibited from seeking a waiver to extend the 180 calendar
day period specified in subdivision (e), nor shall the applicant be
permitted to waive that period.
  SEC. 2.  Section 1625.5 is added to the Insurance Code to read:
   1625.5.  (a) A personal lines licensee is a person authorized to
transact automobile insurance, as defined in Section 660, residential
property insurance, as defined in Section 10087, including
earthquake and flood insurance, personal watercraft insurance, and
umbrella or excess liability insurance providing coverage when
written over one or more underlying automobile or residential
property insurance policies, and a personal lines broker-agent
license is a license to so act.
   (b) A license under this section shall be applied for and renewed,
following successful completion of a qualifying examination on this
code, ethics, and products sold under the license, in the same manner
as is provided in this chapter for a license to act as a fire and
casualty broker-agent, except as provided in subdivision (c) or where
provided otherwise.
   (c) Notwithstanding any other provision of law, for a personal
lines license:
   (1) "License term" for a personal lines license means all of that
two-year period beginning on the first day of January and ending the
last day of December in the second subsequent year.
   (2) "License year" for a personal lines license means either the
first or second calendar year of a license term.
  SEC. 3.  Section 1631 of the Insurance Code is amended to read:
   1631.  Unless exempt by the provisions of this article, a person
shall not solicit, negotiate, or effect contracts of insurance, or
act in any of the capacities defined in Article 1 (commencing with
Section 1621) unless the person holds a valid license from the
commissioner authorizing the person to act in that capacity.  The
issuance of a certificate of authority to an insurer does not exempt
an insurer from complying with this article.
  SEC. 3.5.  Section 1631.5 is added to the Insurance Code, to read:

   1631.5.  Nothing in this article shall be deemed to affect the
current operations of the Healthy Families Program (Part 6.2
(commencing with Section 12693) of Division 2) or the Access for
Infants and Mothers Program (Part 6.3 (commencing with Section 12695)
of Division 2).
  SEC. 4.  Section 1635 of the Insurance Code is amended to read:
   1635.  No license is required under the provisions of this chapter
for a person to act in the following capacities or to engage in the
following activities, providing no commission is paid or allowed,
directly or indirectly, by the insurer, creditor, retailer, or other
person for acting in those capacities or engaging in those
activities:
   (a) The business of examining, certifying or abstracting titles to
real property.
   (b) The solicitation for membership in a fraternal benefit society
and other activities to the extent and as described in Sections
11013 and 11102 of this code.
   (c) As a salaried representative of a reciprocal or interinsurance
exchange or of its attorney in fact.
   (d) Employment which does not include the solicitation,
negotiation, or effecting of contracts of insurance and the signing
of policies or other evidences of insurance.
   (e) As an officer of an insurer or a salaried traveling employee
of the type commonly known as a special agent or as an agency
supervisor, while performing duties and exercising functions that are
commonly performed by a special agent or agency supervisor, if the
person engaging in the activity does not do either of the following:

   (1) Effect insurance.
   (2) Solicit or negotiate insurance except as a part of and in
connection with the business of a fire and casualty broker-agent or
life agent licensed under this chapter.
   (f) As an officer or salaried representative of a life insurer if
his or her activities are limited to direct technical advice and
assistance to a properly licensed person and his or her activities do
not include effecting, soliciting, or negotiating insurance except
as a part of and in connection with the business of a fire and
casualty broker-agent or life agent licensed under this chapter.
   (g) Employment by an insurer at its home or branch office which
does not include the solicitation, negotiation, or effecting of
contracts of insurance, and which may as part thereof include the
signing of policies or other evidences of insurance.
   (h) The completion or delivery of a declaration or certificate of
coverage under a running inland marine insurance contract evidencing
coverage thereunder and including only those negotiations as are
necessary to the completion or delivery if the person performing
those acts or his or her employer has an insurable interest in the
risk covered by the certificate or declaration.
   (i) As an employee of a licensed fire and casualty broker-agent,
whose employment is one or more of the following:
   (1) That of a regularly salaried administrative or clerical
employee whose activities do not include the solicitation,
negotiation, or effecting of contracts of insurance from the insuring
public.
   (2) That of a salesperson who devotes substantially all of his or
her activities to selling merchandise and whose solicitation of
insurance is limited only to the quoting of a premium for insurance
to be included in the purchase price covering the interest retained
in the merchandise by the seller.
   (j) The solicitation, negotiation or effectuation of home
protection contracts by a person licensed pursuant to Part 1
(commencing with Section 10000) of Division 4 of the Business and
Professions Code in connection with his or her licensed function
authorized by Section 10131 or 10131.6 of the Business and
Professions Code.  Neither the receipt of a payment permitted by
Section 12760 nor the receipt of a benefit permitted by Section 12765
shall disqualify the recipient from the licensing exemption provided
by this chapter.
   (k) Employees of an insurer whose duties are the inspection,
processing, adjusting, investigation, or settling of claims,
conducting safety inspections, or accepting or rejecting business
from licensed insurance agents or brokers.
   (l) Officers, directors, or employees of an insurer or producer
whose executive, administrative, managerial, or clerical activities
are only indirectly related to solicitation, negotiation, or
effecting the sale of insurance, provided those persons do not have
direct contact with consumers in a sales or service capacity except
as otherwise provided by this section.
   (m) Employees whose activities are limited to making clerical
changes in existing policies or providing indirect marketing and
servicing support  for the purpose of determining general interest in
insurance products.
  SEC. 4.5.  Section 1639 of the Insurance Code is amended to read:
   1639.  The following types of licenses under this chapter may be
issued to nonresidents:
   (a) A fire and casualty broker-agent if the nonresident is duly
licensed to transact more than one class of insurance, other than
life insurance, disability insurance or life and disability
insurance, under the laws of the state or province of Canada wherein
he or she resides, provided the state or province does not prohibit a
resident of this state from acting as an insurance agent or broker.

   (b) A personal lines broker-agent if the nonresident is duly
licensed to transact those lines of insurance described in Section
1625.5, under the laws of the state or province of Canada wherein he
or she resides, provided the state or province does not prohibit a
resident of this state from acting as an insurance agent or broker.
   (c) A life agent if the nonresident is licensed in the state of
his or her residence to transact life insurance and disability
insurance.
   The class or classes of insurance which a person is licensed to
transact in the state or province of his or her residence shall be
determined according to the definitions of classes of insurance in
Sections 101 to 120, inclusive, and in Section 1625.5 of this code.
A certificate under official seal and original signature from the
insurance regulatory authority of the nonresident's home state or
province may be accepted as evidence of the applicant's license
status and the capacity or capacities in which he or she is licensed.

   (d) Nothing in this section shall require a nonresident fire and
casualty, personal lines, or life licensee, who has completed a
continuing education course in his or her resident jurisdiction, to
comply with California's continuing education requirements.  However,
if the resident jurisdiction has no continuing education
requirements, the licensee shall comply with California's continuing
education requirements to be eligible for a nonresident license.
  SEC. 4.7.  Section 1642 of the Insurance Code is amended to read:
   1642.  An insurer or reciprocal or interinsurance exchange is not
eligible for any license under this chapter; but a corporation
rendering sales services in connection with a separate account may be
licensed irrespective of the extent of ownership of the corporation
by an insurer.  Nothing herein shall be interpreted to prohibit an
insurer or reciprocal or interinsurance exchange from licensing its
employees who solicit, negotiate, or effect contracts of insurance
pursuant to this article.
  SEC. 4.8.  Section 1649.5 of the Insurance Code is amended to read:

   1649.5.  Notwithstanding Section 1642, an insurer may own or
control, whether directly or indirectly, a separate entity licensed
under this chapter as a fire and casualty broker-agent or life agent
as defined in Section 1621, 1622, or 1623, respectively.  Insurance
transacted by a fire and casualty broker-agent with and on behalf of
the owning or controlling insurer shall be in its capacity as an
insurance agent.
  SEC. 5.  Section 1676 of the Insurance Code is amended to read:
   1676.  (a) Except as set forth in Sections 1675 and 1679, the
commissioner shall not issue a permanent license pursuant to this
chapter to an applicant therefor unless the applicant has within the
12-month period next preceding the date of issue of the license taken
and passed the qualifying examination for that license.  This
section shall not apply to a person licensed as a fire and casualty
broker-agent who applies for a license as a personal lines
broker-agent.
   (b) An applicant for a personal lines license pursuant to Section
1625.5 who has been continually employed by an admitted insurer or
licensed fire or casualty broker-agent in a full-time position for at
least  three years  prior to January 1, 2001, shall be exempted, at
the discretion of the commissioner, from having to take and pass an
examination to obtain a personal lines license.  An exempted
applicant shall be required to comply with all other provisions of
this article pertaining to the issuance and maintenance of a personal
lines license.
   (c) An application for a personal lines license shall be submitted
to the commissioner as provided for in Article 4 (commencing with
Section 1652).
   (d) The commissioner may deny any application for a personal lines
license as provided in Article 6 (commencing with Section 1666).
   (e) In addition to the application, any applicant seeking
exemption from the examination provisions of this chapter shall also
submit, on a form prescribed by the commissioner, or if a form is not
prescribed, in letter or resume form, information that will permit
the commissioner to determine whether the previous experience of the
applicant warrants an exemption from having to take an examination to
obtain a license.
   (f) The commissioner shall require an applicant to take an
examination to obtain a license if the commissioner determines that
the applicant has failed to demonstrate that previous experience
warrants an exemption from examination.  In the absence of making
that determination, the request for exemption from examination shall
be granted.
   (g) This section shall not be applicable to any applicant for a
nonresident license pursuant to subdivision (b) of Section 1639.
   (h) This section shall not be applicable to any applicant who has
been refused a license or has had a license suspended or revoked by
the commissioner.
   (i) An applicant for a personal lines license pursuant to Section
1625.5 who seeks an exemption from an examination to obtain a license
shall submit a request to that effect to the commissioner.  An
applicant who does not submit an application on or before December
31, 2001, shall be required to take an examination to obtain a
license.
  SEC. 5.1.  Section 1703 of the Insurance Code is amended to read:
   1703.  Every applicant for an original license to act as a fire
and casualty broker-agent, personal lines broker-agent, life agent,
life analyst, surplus line broker, special lines surplus line broker,
motor club agent, or bail agent or bail solicitor or bail permittee
shall, as part of the application, endorse an authorization for
disclosure to the commissioner of financial records of any fiduciary
funds as defined in Section 1733, pursuant to Section 7473 of the
Government Code.  The authorization shall continue in force and
effect for so long as the licensee continues to be licensed by the
department.
  SEC. 5.2.  Section 1749 of the Insurance Code is amended to read:
   1749.  The department shall require all new applicants for license
as a fire and casualty broker-agent, personal lines broker-agent, or
as a life agent to meet prelicensing education standards as follows:

   (a) Require a minimum of 40 hours of prelicensing classroom study
as a prerequisite to qualification for a fire and casualty
broker-agent license.  The curriculum for satisfying this requirement
shall be approved by the curriculum board and submitted to the
commissioner for final approval.  Any additions to the minimum
requirements provided by this section shall be approved by the
curriculum board pursuant to Section 1749.1 and certified by the
department.
   (b) Require a minimum of 20 hours of prelicensing classroom study
as a prerequisite for qualification for a personal lines broker-agent
license.  The curriculum for satisfying this requirement shall be
approved by the curriculum board and submitted to the commissioner
for final approval.  Any additions to the minimum requirements
provided by this section shall be approved by the curriculum board
pursuant to Section 1749.1 and certified by the department.
   (c) Require a minimum of 40 hours of prelicensing classroom study
as a prerequisite for qualification for a life agent license.  The
curriculum for satisfying this requirement shall be approved by the
curriculum board and submitted to the commissioner for final
approval.  Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to
Section 1749.1 and certified by the department.  This curriculum
shall also include instruction in workers' compensation and general
principles of employers' liability.
   (d) In addition to the 40 hours prelicensing education required to
qualify for a license as a fire and casualty broker-agent or life
agent, or the 20 hours prelicensing education required to qualify for
a license as a personal lines broker-agent, the department shall
require 12 hours of study on ethics and this code.  Where an
applicant seeks a license for both the fire and casualty broker-agent
license and the life license, the applicant shall only be required
to complete one 12-hour course on ethics and this code.  The
curriculum for satisfying this requirement shall be approved by the
curriculum board and submitted to the commissioner for final
approval.
   (e) An applicant for a life agent license, a fire and casualty
broker-agent license, or a personal lines broker-agent license who is
currently licensed as such in another state and who has completed 40
hours of prelicensing education as a requirement for licensing in
that state shall be required to complete only the course of study on
ethics and the Insurance Code, as required by Section 1749.
Additionally, any applicant for such a license holding one or more of
the designations specified in subdivisions (a) to (e), inclusive, of
Section 1749.4 shall be exempted from any requirement for courses in
general insurance that would otherwise be a condition of issuance of
the license.
  SEC. 5.3.  Section 1749.31 is added to the Insurance Code, to read:

   1749.31.  An individual licensed as a personal lines broker-agent
shall complete required continuing education courses, programs of
instruction, or seminars approved by the commissioner.  The minimum
number of hours required is 10 hours during each of the calendar
years in a license term prior to the renewal of the license.
  SEC. 5.5.  Section 1749.6 of the Insurance Code is amended to read:

   1749.6.  Any person failing to meet the requirements imposed by
Section 1749.3 or 1749.31, and who has not been granted an extension
of time within which to comply by the commissioner shall have his or
her license automatically terminated until the time that the person
demonstrates to the satisfaction of the commissioner that he or she
has complied with all of the requirements of this article and all
other laws applicable thereto.  Where a person cannot perform the
requirements of this article due to a disability or inactivity due to
special circumstances, the commissioner shall provide a procedure
for the person to place his or her license on inactive status until
the time that the person demonstrates to the satisfaction of the
commissioner that he or she has complied with or made up all of the
requirements of this article for the period of disability or
inactivity.
  SEC. 5.6.  Section 1750 of the Insurance Code is amended to read:
   1750.  The commissioner shall require in advance as a fee for
filing application for the hereinafter designated licenses, renewals
thereof, or changes in outstanding licenses, an amount calculated as
set forth herein.  The fee is determined by multiplying the number of
license years in the period of the license applied for or the
remaining period of an existing license counting any initial
fractional license year of that period as one year for that purpose,
as follows:
   (a) Fire and casualty broker-agent, fifty-six dollars ($56).
   (b) Personal lines broker-agent, resident, fifty-six dollars
($56).
   (c) Life agent, resident, fifty-six dollars ($56).
   (d) Life agent, nonresident, fifty-six dollars ($56).
  SEC. 5.7.  Section 1750.5 of the Insurance Code is amended to read:

   1750.5.  The fee for filing application for a nonresident fire and
casualty broker-agent or nonresident personal lines broker-agent
license shall be that established in Section 1750 for a resident fire
and casualty broker-agent or resident personal lines broker-agent,
except that if the applicant's state, commonwealth or Canadian
province of residence has fees for any nonresident insurance license
greater than for a like resident license the fee for filing an
application for a nonresident fire and casualty broker-agent license
shall not be less than the amount a California resident would be
required to pay to obtain a like license for a like term in the
applicant's state, commonwealth or Canadian province of residence.
   Whenever another state, commonwealth, or Canadian province by
statute imposes any restrictions or limitations on a California
resident, the restrictions or limitations shall apply to a resident
of that state, commonwealth, or Canadian province in California.
This section shall not be construed to require a countersignature on
a policy or contract, or the payment of a countersignature fee.
  SEC. 5.8.  Section 1751 of the Insurance Code is amended to read:
   1751.  The commissioner shall require, in advance, a fee for
filing the following documents:
   (a) Application for registration of change in membership of a
copartnership licensed as any of the following:
   (1) Fire and casualty broker-agent, fifty-six dollars ($56).
   (2) Life agent, resident, forty-eight dollars ($48).
   (3) Life agent, nonresident, fifty-three dollars ($53).
   (4) Personal lines broker-agent, fifty-six dollars ($56).
   (b) Notice for adding or removing from any life agent's, fire and
casualty broker-agent's, or personal lines broker-agent's license
issued to an organization the name of any natural person named
thereon, sixteen dollars ($16).
   (c) First amendment to an application, eight dollars ($8); a
second and each subsequent amendment to an application, sixteen
dollars ($16).
   (d) Original application to be given the qualifying examination
for a license of a fire and casualty or personal lines licensee,
twenty-seven dollars ($27) for each person to be examined.
   (e) Original application to be given the qualifying examination
for a license of a life licensee, twenty-seven dollars ($27) for each
person to be examined.
   (f) Application for reexamination for any of the licenses
mentioned in this section, twenty-seven dollars ($27) for each person
to be reexamined.
   (g) Application which includes a request for a certificate of
convenience pursuant to Article 8 (commencing with Section 1685),
twenty dollars ($20) in addition to, and not in lieu of, fees
otherwise required.
   (h) Application or request for approval of true or fictitious name
pursuant to Section 1724.5 thirty dollars ($30), except that there
shall be no fee when the name is contained in an original
application.
   (i) "A ratification of appointments of agents" whereby the
surviving insurer in a merger or consolidation assumes responsibility
for all agents then lawfully appointed for one of the constituent
insurers and makes each its agent, one hundred three dollars ($103).

   (j) An application or request for approval of:
   (1) A training course pursuant to Section 1691, except when filed
by a degree-conferring college or university, a public educational
institution, or by a private nonprofit educational institution, one
hundred three dollars ($103).
   (2) An arrangement whereby an insurer may qualify certificate of
convenience holders pursuant to Section 1691 by means of an approved
course given on the insurer's behalf by a school or organization
other than itself, fifty-five dollars ($55).
   (k) A bond, pursuant to Article 5 (commencing with Section 1662)
or Section 1760.5 or 1765, except when the bond constitutes part of
an original application filing, sixteen dollars ($16).
   (l) An application or request for a copy of, or a duplicate
license, issued pursuant to Chapter 5 (commencing with Section 1621),
6 (commencing with Section 1760), 7 (commencing with Section 1800),
or 8 (commencing with Section 1831) or Sections 12280 and 12280.2,
sixteen dollars ($16).
   (m) An application or request for clearance and cancellation
notice of a current licensee of record, sixteen dollars ($16).
   (n) An amended action notice pursuant to subdivision (e) of
Section 1704, five dollars ($5).
  SEC. 6.  Section 1751.8 is added to the Insurance Code to read:
   1751.8.  The Department of Insurance shall investigate and
implement a system, and report to the Legislature by January 1, 2001,
regarding that system, under which license fees can be paid
electronically.
  SEC. 7.  Article 16.7 (commencing with Section 1758.9) is added to
Chapter 5 of Part 2 of Division 1 of the Insurance Code, to read:

      Article 16.7.  Credit Insurance Agents

   1758.9.  No person shall sell or solicit any form of credit
insurance in this state, and receive a commission for their efforts,
unless that person is licensed as an insurance agent or broker
pursuant to Article 3 (commencing with Section 1631) or is licensed
as a credit insurance agent or endorsee under this article.
   1758.91.  The commissioner may issue to an applicant that has
complied with the requirements of this article, a credit insurance
agent license to offer or sell those types of insurance specified in
Section 1758.96 in connection with, and incidental to, a loan or
extension of credit, on behalf of any insurer authorized to write
those types of insurance in this state.
   1758.92.  (a) An applicant for a credit insurance agent license
under this article shall submit each of the following to the
commissioner:
   (1) A written application for licensure signed by the applicant or
an officer of the applicant, in the form prescribed by the
commissioner.
   (2) A certificate by the insurer that is to be named in the credit
insurance agent license, stating that the insurer has satisfied
itself that the named applicant is trustworthy and competent to act
as its insurance agent limited to this purpose and that the insurer
will appoint the applicant to act as its agent in reference to
selling or soliciting the kind or kinds of insurance that are
permitted by this article, if the credit
               insurance agent license applied for is issued by the
commissioner.  The certification shall be subscribed by an officer or
managing agent of the insurer on a form prescribed by the
commissioner.
   (3) An application fee, and each license period thereafter, a
renewal fee, in an amount or amounts determined by the department as
sufficient to defray the department's actual costs of processing the
application or renewal and implementing this article.
   The limitation on fee increases of 10 percent without prior
approval of the Legislature set forth in Section 12978 shall not
apply to the application or renewal fee set forth in this subdivision
during the years 2002, 2003, and 2004.
   (b) Notwithstanding any other provision of law to the contrary,
the provisions set forth in Sections 1667, 1668, 1668.5, 1669, 1670,
1738, and 1739 apply to any application for or issuance of a license,
or any application for or approval of an endorsee, pursuant to this
article.
   1758.93.  (a) An employee of an organization that has been issued
a credit insurance agent license pursuant to this article may be an
endorsee on the license if all of the following conditions have been
met:
   (1) The employee is 18 years of age or older.
   (2) The employee submits an application to the department that
includes a signed affidavit, in a form prescribed by the
commissioner, stating the applicant has read the credit insurance
training material submitted to the commissioner and that the
applicant has received from the organization training in, and is
knowledgeable about, the credit insurance products to be sold,
ethics, and market practices.
   (3) The employee submits an application fee, and each year
thereafter, a renewal fee, in an amount or amounts determined by the
department as sufficient to defray the department's actual costs of
processing the application or renewal and implementing this article.

   (b) Prior to allowing any endorsee to offer or sell credit-related
insurance, the licensed organization shall provide training to each
endorsee about the credit insurance products to be sold, and shall
submit annually to the department the names of endorsees and a
statement of compliance with this article.  Training materials used
by the organization to train endorsees shall be submitted to the
department at the time the organization applies for its credit
insurance agent license, and each year thereafter when that license
is renewed.  Any changes to previously submitted training materials
shall be submitted to the department with the changes highlighted 30
days prior to their use by the licensee.  Training materials and
changes to those materials submitted to the department pursuant to
this subdivision shall be deemed approved for use by the company
unless it is notified by the department to the contrary.  Failure by
a credit insurance licensee to submit training materials or changes
for departmental review or use of unapproved or disapproved training
materials shall constitute grounds for denial of an application for a
license, nonrenewal of a license, or suspension of a license, as
appropriate.
   (c) The credit insurance agent shall periodically retrain its
endorsees.
   1758.94.  (a) The manager at each business location of an
organization licensed as a credit insurance agent, shall be listed as
an endorsee on the organization's license and shall be responsible
for the training and supervision of each additional endorsee at that
location.  Each licensee shall identify the endorsee who is the
manager at each location for the purposes of this article.
   (b) An employee of a credit insurance agent who complies with the
requirements of Section 1758.93, and is endorsed on the license of
the credit insurance agent, may act on behalf of, and under the
supervision of, the credit insurance agent in matters relating to
transacting insurance under that agent's license.  The conduct of an
endorsee of a credit insurance agent acting within the scope of
employment or agency shall be deemed the conduct of the credit
insurance agent for purposes of this article.
   1758.95.  (a) If a licensee or endorsee violates any provision of
this article or any other provision of this code, the commissioner
may do either of the following:
   (1) After notice and hearing, suspend or revoke the license of the
credit insurance agent.
   (2) After notice and hearing, impose other penalties that the
commissioner deems necessary and convenient to carry out the purposes
of this code, including suspending the privilege of transacting
credit insurance pursuant to this article at specific business
locations where violations have occurred, imposing fines on the
credit insurance agent, individual endorsees or endorsee managers,
and suspending or revoking the endorsement of a named endorsee or
endorsee manager.
   (b) If any person sells insurance in connection with or incidental
to a loan or other extension of credit or holds himself or herself
or an organization out as a credit insurance agent without obtaining
the license required by this article, as being an endorsee when that
person is not an endorsee, or as being licensed pursuant to Chapter 5
(commencing with Section 1631) without obtaining that license, the
commissioner may issue a cease and desist order pursuant to Section
12921.8.
   (c) Notwithstanding any other provision of law to the contrary,
the provisions of Section 1748.5 are applicable to both the
organization issued a license pursuant to this article and any
endorsee to that license.
   1758.96.  A person licensed pursuant to this article may act as a
credit insurance agent for an authorized insurer only with respect to
the kinds of insurance specified in this section sold in connection
with and incidental to a loan or other extension of credit other than
a loan in excess of sixty thousand dollars ($60,000) relating to or
secured by real property where the repayment period does not exceed
10 years.  The sale of credit insurance products as specified in this
section in excess of sixty thousand dollars ($60,000) relating to or
secured by real property where any compensation, fee, or commission
is paid dependent on the placement of credit insurance, requires a
license to act as an insurance agent or life agent pursuant to
Section 1621 or 1622.
   (a) Credit life insurance.
   (b) Credit disability insurance.
   (c) Credit involuntary unemployment insurance or credit
loss-of-income insurance.
   (d) Credit property insurance.
   1758.97.  A credit insurance agent shall not sell or offer to sell
insurance pursuant to this article unless all of the following
conditions are satisfied:
   (a) The credit insurance agent provides brochures or other written
materials to the prospective purchaser that do all of the following:

   (1) Summarize the material terms and conditions of coverage
offered, including the identity of the insurer.
   (2) Describe the process for filing a claim, including a toll-free
telephone number to report a claim.
   (3) Disclose any additional information on the price, benefits,
exclusions, conditions, or other limitations of those policies that
the commissioner may by rule prescribe.
   (b) The credit insurance agent makes all of the following
disclosures, either with or as part of each individual policy or
group certificate, or with a notice of proposed insurance, or, if the
insurance is sold at the same time and place as the related credit
transaction, in a statement acknowledged by the purchaser in writing
on a separate form, electronically, digitally, or by tape recording:

   (1) That the purchase of the kinds of insurance prescribed in this
article is not required in order to secure the loan or an extension
of credit.
   (2) That the insurance coverage offered by the credit insurance
agent may provide a duplication of coverage already provided by a
purchaser's other personal insurance policies or by another source of
coverage.
   (3) That the endorsee is not qualified or authorized to evaluate
the adequacy of the purchaser's existing coverages, unless the
individual is licensed pursuant to Article 3 (commencing with Section
1631).
   (4) That the customer may cancel the insurance at any time.  If
the customer cancels within 30 days from the delivery of the
insurance policy, certificate, or notice of proposed insurance, the
premium will be refunded in full.  If the customer cancels at any
time thereafter, any unearned premium will be refunded in accordance
with applicable law.
   (c) Evidence of coverage is provided to every person who elects to
purchase that coverage.
   (d) Costs for the insurance are separately itemized in any loan,
credit, or retail agreement.
   (e) The insurance is provided under an individual policy issued to
the purchaser or under a group or master policy issued to the
organization licensed as a credit insurance agent by an insurer
authorized to transact the applicable kinds or types of insurance in
this state.  Any of the conditions and disclosures specified in this
section shall be deemed satisfied if the consumer is otherwise
provided with the information required in this section by any other
disclosures required by existing federal or state law or regulations.

   No statement, disclosure, or notice made for the purpose of
compliance with this section shall be construed to cause the policy
form, certificate of insurance, or notice of proposed insurance, by
themselves, to be considered nonstandard forms, as described in
Article 6.9 (commencing with Section 2249) of Subchapter 2 of Chapter
5 of Title 10 of the California Code of Regulations.
   1758.98.  Under the authority of the credit insurance agent
license, a credit insurance agent shall not do any of the following:

   (a) Offer to sell insurance except in conjunction with, and
incidental to, a loan or extension of credit.
   (b) Advertise, represent, or otherwise portray itself or its
employees, agents, or endorsees as licensed insurers, life agents, or
fire and casualty broker-agents.
   (c) Pay any unlicensed person any compensation, fee, or commission
dependent on the placement of insurance under the agent's license.
Nothing in this subdivision shall prohibit production payments or
incentive payments to an endorsee.
   1758.99.  An organization licensed as a credit insurance agent
shall prominently display its license number and the department's
toll free consumer hot line telephone number on brochures and
information sheets required by this article and on any evidence of
insurance.
   1758.991.  Any insurer that provides insurance to be sold by an
organization licensed as a credit insurance agent shall file a copy
of any individual policy issued to a purchaser, or any policy or
certificate issued under a group or master policy to an organization
licensed as a credit agent, with the commissioner, who shall make
that policy available to the public.
   1758.992.  As used in this article, the following definitions have
the following meanings:
   (a) "Enrollment" means the process of soliciting or accepting
enrollments or applications from a debtor under a credit insurance
policy, which includes informing the debtor of the availability of
coverage, calculating the insurance charge, preparing and delivering
the certificate of insurance or notice of proposed insurance,
answering questions regarding the coverage, or otherwise assisting
the debtor in making an informed decision whether or not to elect to
purchase credit insurance.
   (b) "Creditor" means a lender of money or a vendor or lessor of
goods, services, property, rights, or privileges, for which payment
is arranged through a credit transaction, or any successor to the
right, title, or interest of that lender, vendor, or lessor, and any
affiliate, associate, subsidiary, subcontractor, director, officer,
or employee of any of them or any other person in any way associated
with any of them.
   (c) "Credit insurance agent license" means an agent license issued
to an individual or organization for the enrollment and sale of
credit insurance.
   (d) "Credit insurance" includes credit life insurance, credit
disability insurance, credit involuntary unemployment insurance,
credit loss-of-income insurance, or credit property insurance.
   (e) "Credit life insurance" and "credit disability insurance" have
the same meanings, and include only those forms of insurance, as
defined in Sections 779.2 and 779.3.
   (f) "Credit involuntary unemployment insurance" or "credit
loss-of-income insurance" means insurance issued to provide indemnity
for payments becoming due on a specific loan or other credit
transaction while the debtor is involuntarily unemployed, as defined
in the policy.
   (g) "Credit property insurance" means insurance that provides
coverage (1) on personal property pledged or offered as collateral
for securing a personal or consumer loan, or (2) on personal property
purchased under an installment sales agreement or through a consumer
credit transaction, but does not include any insurance that provides
theft, collision, liability, property damage, or comprehensive
insurance coverage in any automobile or any other self-propelled
vehicle that is designed primarily for operation in the air or on the
highways, waterways, or sea, and its operating equipment, or that is
necessitated by reason of the liability imposed by law for damages
arising out of the ownership, operation, maintenance, or use of those
vehicles.  However, that excluded insurance does include single
interest coverage on any of those vehicles that insures the interest
of the creditor in the same manner as collateral secures a loan.
   1758.993.  Nothing in this article regulating the sale of credit
insurance shall be construed to impair or impede the application of
any other law regulating the sale of credit insurance, including, but
not limited to, the California Finance Lenders Law, Division 9
(commencing with Section 22000) of the Financial Code.
   1758.994.  The commissioner shall submit a report to the
Legislature by June 30, 2004, regarding the effectiveness of this
article in protecting consumers involved in credit insurance
transactions.  This report shall include, but not be limited to, the
number and categories of licensees licensed pursuant to this article,
the number and nature of enforcement actions related to credit
insurance licensing or marketing issues, and any needed legislative
reforms recommended by the commissioner.
  SEC. 8.  The Insurance Commissioner shall adopt rules to implement
this act, including rules applicable equally to employees of insurers
and producers specifying what constitutes clerical changes for the
purpose of Section 1635 of the Insurance Code.  The rules shall be
adopted as emergency regulations in accordance with Chapter 3.5
(commencing with Section 11340) of the Government Code, and for the
purpose of that chapter, including Section 11349.6 of the Government
Code, the adoption of rules shall be considered by the Office of
Administrative Law to be necessary for the immediate preservation of
the public peace, health and safety, and general welfare.
  SEC. 9.  The provisions of this act shall become operative on
January 1, 2002, so as to provide for an orderly regulatory process.
The Legislature declares that enactment of this act, which sets fees
for specific license categories, shall not be construed to affect
the validity of any fee increases adopted by the commissioner
pursuant to Section 12978.
  SEC. 10.  The first-year startup costs incurred by state agencies
that are associated with the implementation of this act shall be
reimbursed from fee revenues authorized by this act that are received
in subsequent years.
  SEC. 11.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
